Negotiating with the Public Sector is good for my business
Discussion
Just been to meet with a public sector organisation to try and close a deal regarding a service we are able to provide for them.
I spent ages looking at financial models and worked out that I could make the profit I need if I charge £1020 per person per week. So I went into the negotiation asking for £1200 a week expecting to get knocked down to about £1050.
The negotiation went something like this:
me - It looks like our base price is £1200 pp per week, can you make it work at that?
them - Oh, we can pay more than that £1500 pp per week will be fine
me - where do I sign?
No wonder our public services are bloody expensive, this service was for 140 people for 5 years so they are happy to pay £16m more than they need to!
I spent ages looking at financial models and worked out that I could make the profit I need if I charge £1020 per person per week. So I went into the negotiation asking for £1200 a week expecting to get knocked down to about £1050.
The negotiation went something like this:
me - It looks like our base price is £1200 pp per week, can you make it work at that?
them - Oh, we can pay more than that £1500 pp per week will be fine
me - where do I sign?
No wonder our public services are bloody expensive, this service was for 140 people for 5 years so they are happy to pay £16m more than they need to!
A similar tale from the public sector:
Them: We really like your phone system and can't find another one that does what we need like yours does.
Me: Excellent, let's complete the order.
Them: I'm afraid we can't buy it.
Me: Oh. What's the problem?
Them: Your quote is for £112k and our budget is £160k.
Me: Erm, well surely it's in budget and you can buy it then?
Them: No, it needs to cost between £150 and £160k or we can't buy it.
Me, Erm, OK. If I re-quote at £155k will you buy it?
Them: Yes.
Them: We really like your phone system and can't find another one that does what we need like yours does.
Me: Excellent, let's complete the order.
Them: I'm afraid we can't buy it.
Me: Oh. What's the problem?
Them: Your quote is for £112k and our budget is £160k.
Me: Erm, well surely it's in budget and you can buy it then?
Them: No, it needs to cost between £150 and £160k or we can't buy it.
Me, Erm, OK. If I re-quote at £155k will you buy it?
Them: Yes.
Yep that’s how the public sector works. A few years ago, I was shown a copy of the IT procurement agreement for a local authority. For the desktop procurement part alone, excluding configuration and installations costs, it worked out at approximately 150% of retail cost per unit (based on wandering through John Lewis that lunchtime) with a minimum total volume of 600 units per year over 3 years.
The outsourcing deals make that seem like good value for money!
The outsourcing deals make that seem like good value for money!
Edited by AndrewW-G on Thursday 25th November 16:28
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